Kevin Warsh moves one step closer to becoming next Fed chair

• Warsh, a former Fed governor (2006-2011), would replace Jerome Powell, whose term as chair ends May 15, 2026, though Powell could remain on the Board of Governors until January 2028
• Sen. Tillis removed his hold after the DOJ closed its politically controversial investigation into Powell's testimony regarding the Fed's renovation project, with oversight transferred to the Fed's inspector general
• The full Senate confirmation vote could occur soon, potentially allowing Warsh to take over before the June Federal Open Market Committee meeting

Summary: Kevin Warsh Advances Toward Fed Chair Confirmation

Key Development:

Kevin Warsh's nomination to become Federal Reserve Chair moved significantly forward on Wednesday as the Senate Banking Committee voted 13-11 to advance his confirmation to the full Senate. Warsh, a former Fed governor (2006-2011), was nominated to replace current Chair Jerome Powell, whose term ends May 15, 2026.

Political Breakthrough:

The nomination had been stalled by Sen. Thom Tillis (R-N.C.), who blocked the process due to concerns over a Justice Department investigation into Powell's testimony regarding the Fed's costly renovation project. Tillis viewed the probe as politically motivated and a threat to Fed independence. The DOJ closed its investigation on Friday, with U.S. Attorney Jeanine Pirro transferring the matter to the Fed's inspector general, Michael Horowitz, clearing Tillis to support the nomination.

Timeline and Implications:

A full Senate confirmation vote could occur soon, potentially allowing Warsh to assume the role in time for the Fed's June policy meeting. Powell may continue serving as a Board of Governors member through his term ending January 31, 2028.

Current Monetary Policy Context:

The Federal Open Market Committee is expected to maintain interest rates at the current 3.5%-3.75% target range. Powell's press conference on Wednesday afternoon, scheduled for approximately 2:30 p.m. ET, is anticipated to be his last as Fed Chair.

Market Impact:

The advancement signals reduced uncertainty around Fed leadership transition, though markets will closely monitor any policy shifts under new leadership amid ongoing inflation concerns.